The news comes as something of a surprise; it was announced at a hastily called news conference Monday. Juan Carlos' son will become Spain's next monarch as King Felipe VI.
Spain's Prime Minister Mariano Rajoy announced the news today, saying that Juan Carlos is "convinced that this is the best moment for a change in the leadership of state with complete normalcy," according to El Pais.
At 76, Juan Carlos is passing the crown to his son, Crown Prince Felipe, 46. In recent years, the king has been having health problems that included hip surgery.
In 2012, Juan Carlos made headlines for an ill-timed gaffe: going on a trip to hunt elephants in Africa when his country was struggling with profound financial problems. In addition to showing he was out of touch with regular Spaniards, the trip led the national branch of the World Wildlife Fund to remove the king as its honorary head, a post he had occupied for more than 40 years.
Other family scandals have also tarnished the image of Spain's royalty, including a corruption probe that named his youngest daughter and her husband as suspects.
But Juan Carlos is also credited with introducing and protecting democracy in modern Spain. After coming to power following the death of dictator Francisco Franco in 1975, he ordered democratic elections to install a new government in a country that was still largely divided along the same lines that fought its civil war in the 1930s.
The man he chose to head that effort was Adolfo Suárez, who became one of Spain's most respected prime ministers (Suárez died in March).
And when an attempted military coup threatened the country's young government in 1981, Juan Carlos put his weight behind democracy, going on national television to condemn an attack on parliament and ordering his backers in the armed forces to shut down the rebellion.
As Agence France-Presse notes, Juan Carlos kept his son with him on that tense and dangerous day.
"I wanted him to see what one has to do when one is king," he said.
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